For many years now, sending an interactive e-transfer to a friend has been very easy. In fact, the money transferred is fictitious – or lent by a financial institution – overnight, explaining the restrictions imposed on these transfers. The current clearing and settlement system is outdated and causing significant delays.
The new system will not only allow transactions to be performed in real time, but go further. For individuals, for example it is possible:
- Pay internet bill in real time to avoid late fees;
- Pay rent to the landlord (monthly rent, apartment number, etc.) including all information available on the check;
- Pay your tax immediately;
- Pay for a car purchase rather than going to the bank to pick up a bank draft or make a down payment on a property with one click;
- Receive money from their insurance company to bury the loss in seconds.
Governments can also deposit funds into citizens’ bank accounts in seconds.
Payments Canada Director of Modernization Andrew McFarlane talks about a
Game changer (Major change) For the Canadian monetary ecosystem. Fund transfers are fast, unchangeable, secure and supported by data and can significantly increase their limits.
This new system offers a strong alternative to transferring money in real time with data, which significantly reduces the size of checks in the ecosystem.
In this case, the already depleted checks will disappear. In 2019 alone, consumers and businesses saw their volume of consumption decline by 12% and 15%, respectively.
“We are working with the government on how to reduce the scattering of funds and the issuance of checks,” McFarlane said. We are also working with other sectors to reduce the number of checks in the ecosystem.
Big change for companies
The Canadian Federation of Independent Business (CFIB) is anxiously awaiting this change.
Small businesses need a lot of cash, but the use of checks can sometimes take several days to access it.
This can cause delays in payments to suppliers or deliveries, Said Jasmine Gunnett, CFIB Vice President for National Affairs.
Similar checks, on the other hand, keep a record of transactions when verification takes place, so most of them continue to use them. The new system can ensure both speed and detection, enough to end this confusion.
Other avenues open to companies are to be able to pay their workers as soon as the shift is done or to reimburse employees quickly for expenses.
Canada Ates has backed payments as banking companies develop tools on their online platforms to use the new system, and fintech companies create new products and services.
The next step is to connect this platform with others on the planet.